Google stock saw an increase Thursday following the unveiling of its newest artificial intelligence system, Gemini. Business leaders signified that Gemini outgunned OpenAI's GPT-3.5, yet did not provide specifics about its competitiveness with GPT-4. Analysts have been buoyed by Google's progress in AI yet there is still puzzlement as to how the firm will make money from the technology in the long run.
Shares of Google soared over 5% Thursday, following their announcement of their newest artificial intelligence model, Gemini, which will put them in competition with OpenAI, Microsoft and Meta. This will be the stock's biggest day since Aug. 29. Wells Fargo's trading desk commented that the announcement should put an end to queries over Google's AI, and the model appearing to have a positive effect on the pre-marketing bid. However, speculation has risen over the monetization of Google's Gemini, but the desk concluded that Google is still showing they have strength. Finally, Bank of America analysts believe that Alphabet has felt some pressure over its AI capabilities this past year, but that debuting a "well-branded" model could result in a positive outcome for sales from both the search engine and the Cloud enterprises. They anticipate the data indicating Google has cutting-edge, singular AI capabilities will be beneficial for the shares during the first half of 2024.
It remains to be seen if Google intends to make money in the long run through its Gemini technology in all of its products, although it will start allowing customers to access the technology through Google Cloud later this month. Executives at Google said Gemini performs better than the OpenAI GPT-3.5 chatbot, but did not reveal how it measures up to the latest OpenAI model GPT-4 Turbo. However, Gemini does point to a potential for generating revenue with AI. Microsoft just unveiled Copilot, made possible through OpenAI ChatGPT, that will come bundled with programs like Word, Excel, and other applications in Office, and will be priced at $30 per user per month. Analysts at Piper Sandler forecasted in October that such a move could add up to over $10 billion to Microsoft's annual revenue by 2026. Although JPMorgan analysts said Wall Street gave a "yawn" to the announcement, they stated that they were "encouraged" to see what Google has achieved through "this major technology shift," though there is still some uncertainty about how to monetize it through Search. KeyBanc analysts commented that Gemini is the "culmination" of other AI-related announcements made by Google during the year, but that it will take time before the technology materially contributes to growth and profits. They advised to be patient while inferring the ramifications on estimates, given that Gemini is still in the process of being incorporated into products like Search. They noted that 2024 is likely to deliver tangible results, and that we are only in the early stages of altering consumer, developer, advertiser, and enterprise behaviors. – CNBC’s Michael Bloom and Jennifer Elias were contributors to this report.
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